World Bank approves US$100 million for Sri Lanka’s economic reforms

Aug 1 – The World Bank Board has approved a 100 million dollar credit from the International Development Association (IDA) to support the Sri Lankan government’s economic reform program.

“Sri Lanka has been making steady progress on economic reforms, with the government aiming to create one million new jobs through a reform package focused on improving the country’s competitiveness, transparency and macroeconomic stability,” a statement said.

A World Bank study, the Systematic Country Diagnostic, has highlighted the need for Sri Lanka to move from “a largely inward looking and public sector driven economy” to one that can unleash the potential of the private sector.

The Sri Lanka Competitiveness, Transparency and Fiscal Sustainability Development Policy Financing (DPF), which is only the second DPF to Sri Lanka in a decade, aims to support the government’s reform agenda by reducing obstacles to private sector competitiveness, establishing transparent and well managed public institutions and improving fiscal sustainability.

“The breadth and depth of the actions implemented signal the comprehensive approach and commitment of the government to tackle difficult reforms aimed at making growth sustainable and creating jobs.” said Françoise Clottes, World Bank Country Director for Sri Lanka and the Maldives.

“The specific actions in this DPF operation will help improve fiscal sustainability and create the fiscal space for delivery of public services, social spending and capital investment, which are integral to the country’s competitiveness”

The Ministry of National Policies and Economic Affairs will be responsible for overall implementation and coordination of the proposed operation.

Other agencies involved include the Ministry of Development Strategies and International Trade, the Ministry of Finance, the Ministry of Parliamentary Reforms and Mass Media, the Auditor General’s Department, the Board of Investment and the Central Bank of Sri Lanka.

“Improving a country’s competitiveness and creating more jobs are complex objectives that require a number of factors – stable macroeconomic environment, good governance, adequate investment climate and skills in demand”, said Emanuel Salinas Munos, Program Leader and Task Team Leader of the World Bank.

“This program will support the Sri Lankan Government’s commitment to enable the potential of Sri Lankan enterprises to grow, become more productive and better integrate with the global economy”.

DPF operations provide untied funding to the Government upon completion of a package of policy and institutional reforms. The funding provided is allocated by the government solely based on its budgetary priorities. The World Bank Group provides technical assistance to the Government in support of its reform efforts under this program.

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